The deal includes all of Nokia's devices and services business and will see 32 thousand Nokia employees transfer to Microsoft, with 4,700 employees in Finland and 18,300 working on manufacturing, assembly and packaging of Nokia products.The deal is expected to be concluded in early 2014.

Microsoft announced a partnership with Nokia in February 2011, with both companies facing stiff competition in the smartphone market from the likes of Apple, HTC, and Samsung.

Current head of Microsoft's Devices and Studios team, Julie Larson-Green, will continue to run the current Devices and Studios team until Microsoft fully acquires Nokia, and will focus on launching the Xbox One in November this year. Larson-Green will join Elop's team following the acquisition.

"It's a bold step into the future--a win-win for employees, shareholders and consumers of both companies," said Ballmer.

"Bringing these great teams together will accelerate Microsoft's share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services."